Comment by Marsymars

Comment by Marsymars 6 days ago

11 replies

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> At that price, gasoline would be about $18/gal and no one could afford to move anything except by ox cart.

Just for some rough math here - I’m currently paying around $1.20/L for gas, and crude oil cost is roughly half of that, so if crude went up by 6x, I’d be looking at $5/L for gas. Gas is currently about 20% of my per-km cost of driving, so that price increase at the pump would increase my per-km cost by about 60%.

FWIW that’s roughly the same per-km cost increase that people have voluntarily taken on over the past decade in North America by buying more expensive cars.

(Though this does apply to personal transportation only, the math on e.g. transport trucks is different)

cmrdporcupine 6 days ago

The issue isn't person transport it is shipping and home heating and agriculture

I drive electric so like to imagine myself sheltered from gas price increases but I know grocery costs would explode

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  • andrew_lettuce 6 days ago

    Especially if you live were gas cost a buck twenty a liter

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    • Marsymars 6 days ago

      Well it's that high because of taxes, so if crude goes up the total price will go up proportionally less than places that have more of the gas cost comprised of non-taxes. (Some of the taxes are flat, and some get waived when gas gets expensive.)

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andrew_lettuce 6 days ago

How can you possibly say that crude is half of the pump price? The economics are incredibly complex and murky, and the price of gas doesn't move with any sort of linear relation to crude except in very long timeframes. Regional refining capacity is way more important.

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  • Hojojo 6 days ago

    The price of gas isn't immediately and directly impacted by the price of crude because of futures contracts. This naturally means gas prices will move to match the price of crude over time. It's a feature of the current system, not an indication that the price of gas isn't heavily reliant on gas. Nobody is making gas with spot prices.

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  • Marsymars 6 days ago

    > How can you possibly say that crude is half of the pump price?

    I googled for a couple sources on the breakdown of the price of gasoline, and they seemed to be in agreement that the raw cost of crude is somewhere around half. (And broke refining out separately.)

    I'm sure it's not perfect, but it seems fairly reasonable. (And it can be off by quite a lot and still not make a huge difference to the cost-per-km of driving.)

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  • Dylan16807 6 days ago

    > How can you possibly say that crude is half of the pump price?

    Look at gas prices in your area. Look at the price of crude. Divide.

    How could you possibly not be able to estimate the fraction?

    And yeah ideally you use an average number over some months and you sample the crude earlier than the gas but those are minor tweaks.

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    • Macha 6 days ago

      That's assuming the other costs (refining energy costs, transport, the company's gross margin) are uncorrelated to the price of crude oil, which seems unlikely

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      • Dylan16807 5 days ago

        A) Just calculating the percentage doesn't assume that.

        B) They shouldn't correlate by a particularly large amount in a competitive environment. For an approximation as rough as "half" and assuming no other changes it's not a big deal.

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